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Author: Phil Codling
21 November 2006
German support services player a&o group has announced that it has bought EDS's Global Field Services (GFS) unit. The move adds 3,000 GFS people to a&o's existing workforce of 1,300. No purchase price has been disclosed. EDS and Hamburg-based a&o have confirmed that the acquisition covers GFS's activities in Germany, Benelux, France, Iberia and the UK. a&o now becomes 'a strategic partner to EDS in EMEA for the provision of break/fix services'.
Comment: This is a long awaited move from the Texan outsourcing giant. Under the leadership of Michael Jordan, the company has taken a good look at its operating units and assessed whether each is core to its positioning as a global IT/applications outsourcer and selective provider of BPO. But EDS's key disposals have taken quite some time to complete: consulting firm AT Kearney finally regained its independence earlier this year, and GFS too appears to have been on the counter for many months. That's not a criticism. EDS decided to divest both operations, but rushing deals and taking crazily low prices is no way to deliver shareholder value.
The sale of GFS is part of a broader trend in the outsourcing industry. The larger players are finding that they need to focus on two key drivers of client value and potential differentiation: industrialisation of service delivery, including effective use of the offshore-onshore model; and the leveraging of niche, often vertical-specific consulting and software assets to deliver genuine customisation and measurable change for the customer. A large onshore support services unit tends to be extraneous to such priorities. Better to partner with a specialist support services provider, albeit with stringent SLAs to protect the core relationship with the customer. Some of my colleagues have coined the term 'vendorisation' to describe this growing tendency for farming out non-core functions within outsourcing contracts to other vendors.
Acquisitive a&o, which is picking up 'a long-term business relationship with EDS' on the back of this latest purchase, is riding the 'vendorisation' wave. Its increasingly multi-country assets in Europe could prove advantageous as it challenges the more nationally-focused support players (like Phoenix IT in the UK) for contracts with the large, international outsourcers.
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